Pop The Hood On Facebook And You'll Find A Disciplined Strategy Machine

The smart-growth values that are the basis of Facebook’s dominance will sustain it in its post-IPO future.

When Facebook held its IPO in May 2012, a common reaction from the public was bafflement at the valuation price of $100 billion. Sure, it had 900 million users worldwide (enough to make Facebook the world’s third-largest nation), but Facebook is just a social network, something to "waste" your lunch hour on looking at friends’ photos and sharing funny videos from You Tube. How could something so trivial be worth anything at all?

To dismiss Facebook as just a social network is to misunderstand something that founder and CEO Mark Zuckerberg knows with every cell in his body, something that has been his obsession since college, and probably long before that. Because we as humans are social beings, and to dismiss a computer site as just a social network would be like dismissing New York City as just a social network, but a New York City with a population of 900 million.

But how did Facebook grow to be the most prominent social network in the world, and will it be able to face its post-IPO future without losing the values that helped it reach this position?

Facebook’s core values

In my book Think Like Zuck: The Five Business Secrets of Facebook's Improbably Brilliant CEO Mark Zuckerberg, I talk about the fact that what has set Facebook apart from MySpace, Twitter, and other social networks is its insistence on authenticity. Around 20,000 profiles were removed every day in 2011 for misuse, including duplicate profiles, fake profiles, and other infractions of Facebook’s user terms. It’s something Zuckerberg has insisted on right from the beginning when he launched The Facebook at his Harvard campus: Users had to verify their accounts using their college email addresses.

Having the value of authenticity built in from the very inception has limited the number of invented or multiple profiles, which has been of tremendous value to both users and brands: Would you like to live in a city where the majority of citizens were phonies, and would you want to do business there?

Along with Zuckerberg’s preoccupation with the authenticity of users is his passion for openness. He doesn’t see a distinction between work and home, professional and personal. It’s this cult of openness that has driven many of Facebook’s most radical (and controversial) innovations, such as the Timeline and the ability to tag photos. These innovations have propelled Facebook beyond other social networks to its present position.

The other defining Facebook value is speed. The company mantra is "done is better than perfect," an ethos that has at times infuriated users and marketers, but one that has saved them from the stagnation that has mired other fast-growing companies.

The Facebook city

In any city where people interact, businesses spring up and networks become more complicated the larger they grow. Once brand pages were added in 2007, businesses were able to interact with consumers in a whole new way: Instead of one-way messages there were conversations, feedback, and sharing of popular posts. Facebook became an integral part of brands’ marketing strategy: Eight out of 10 American companies are now on Facebook.

The Facebook subculture has been a place for third-party apps to thrive and has even given rise to their own currency, Facebook credits. Around $500 million credits were sold in 2011.

Zuckerberg has always stated that money takes second place to user interests, "Simply put: we don't build services to make money; we make money to build better services." Advertising has always been a necessary evil to Facebook but of the $3.7 billion the company made in 2011, $3.2 billion came from ads.
Like any city, Facebook looks outward as well as inward. Media articles and videos can be posted to Facebook, and online purchases can be shared directly to your profile. As the Facebook button becomes ubiquitous across the Internet, Mark Zuckerberg’s dream of an open, sharing community becomes more and more a part of our daily lives.

Pressure for growth

Up until 2012, Facebook was been relatively free to make changes at the breakneck speed that has characterized its growth until now. But now with the IPO there is a new challenge. Zuckerberg has been free to change the game on brands and marketers in line with the speed of development at Facebook, but now he has more than just his users, his board of directors, and his 4,000 employees: He now has shareholders and a huge pressure to deliver profitability.

Can Zuckerberg balance the interests of his users with the expectations of Wall Street?

The complex city

Like any city, the more Facebook grows, the more complex the interactions become. Zuckerberg has always believed in putting the product, rather than the money, first and stated in his letter to investors at the time of the IPO that his first concern was his users.

The values that are the basis of Facebook’s growth will also be able to sustain it in its post-IPO future.

Facebook will focus on smart growth, and smart is something that Facebook is very, very good at. So rather than acres of ad space across your profile, Facebook’s Open Graph will ensure that information is more finely tuned to your specific interests. Third-party apps are becoming more deeply embedded in the Facebook experience and ads are ever more interactive.

The IPO filing stated that 2.7 billion Likes and Comments were being added by users every day on Facebook. The gap between brand and personal pages is becoming smaller as information moves seamlessly between them. This isn’t advertising as we have previously thought of it, but something closer to Mark Zuckerberg’s vision of the private and the public, the consumer and the brand, moving towards one entity.

If Zuckerberg’s company continues to innovate at the same rate, to reimagine what is "normal" and to stick close to their values, then Facebook will be able to marry profitability with its users’ interests. Part of this will be allowing users to shape their own Facebook experience by integrating Facebook culture ever more deeply into the online world. Advertising won’t be so much aimed at users but will be shared organically. Just as the culture of a city can spread globally, so Facebook can share its values outward and continue to evolve.

Ekaterina Walter is a Global Social Innovation Strategist at Intel. You can connect with Ekaterina on Twitter @Ekaterina or through her blog Building Social Bridges.

[Image: Flickr user Johnny Ainsworth]

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